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For instance, only one deal out of 23 that happened in the last 12 months in the payments space went to a wallet company (Paytm) while at least 13 deals happened in allied spaces such as payments processing, last mile payments and merchant on-boarding. According to data compiled by News Corp VCCEdge, $1.5 billion flowed in the payments industry last year.

And this is just the tip of the iceberg. Mobile payments alone gathered close to $1.51 billion in the year 2017 through 13 rounds of funding, according to data compiled by Tracxn. Investors say that the money is going beyond wallet businesses now into last mile solutions because the payment systems are maturing and the industry is leaping into the next stage where collaborations happen and solutions are end-to-end.

“If you are a middleman just doing payments for some merchants, your story is over. But if you are helping payment companies work or offering the full stack of solution from merchant onboarding to payment settlements, you are sitting on a gold mine,” said Vikram Chachra, Founding Partner of early stage fund Eight Innovate which has invested in companies like Ezetap.

Chachra said that his investing thesis about companies like Ezetap and Signzy is that anything that helps faster merchant onboarding and converts cash users to digital payments is worth looking at. Another company taking payments to the last mile is Instamojo, founded by Sampad Swain.

The company helps micro, small and medium merchants accept digital payments through its payment gateway. It has on boarded half a million merchants and recorded ~10 billion of payments last year. It has raised $7 million so far from 10 major investors, including Kalaari Capital and Blume Ventures

“The opportunity is big because digital payments are the lifeblood of the fintech space and investors are looking to back companies which are making profits. Wallets are a cash burn business while payment solutions make money on each transaction,” Swain said.

This was echoed by Ebix Cash’s Chief Growth Officer Bhavik Vasa. Ebix Cash acquired a majority stake in ItzCash last year and since then, the company has made at least five acquisitions in the payments space while four more have come in the fintech space. Vasa said that the company is looking to invest in spaces where the volumes are high and potential to grow is larger in a physical-digital combined model.

“Payments is the first base of digitisation but we are just getting started,” Vasa said. The company has already invested around $350 million in the financial sector, according to publicly available data.

Sumit Jain from Kalaari Capital, which has invested in firms such as Instamojo and AirPay also said that the first wave of investments in wallets and UPI companies is over and the next wave will be led by applications that ride the base layer of payments.

“Given the first wave of payment related investment opportunities is over (wallets, UPI platforms etc), the next set of opportunities lies in application or enablement layers such as queue busting applications, cyber security for payment platforms, NFC applications, AI powered identity management/KYC and many such,” Jain said.